Veterans on My Mind: Everything You Need to Know about VA Loans
The summer months seem to be bracketed by two days set aside to honor those who served our country. Memorial Day, once called Decoration Day, has its origins in the Civil War and Memorial Day, once called Armistice Day, was instituted after WWI. Our veterans deserve our ongoing thanks for their service and one of the best ways our country has done this comes in the form of VA Loans. So I thought I take a moment to outline some of the incredible attributes veteran home buyers can receive when they use VA Loans to purchase their next or first home.
VA Loans offer some unique borrowing opportunities for veterans of all services and their families. While every home buyer deserves the very best mortgage available, the options our veterans and active duty military personnel can be better.
For civilians, the choice for mortgages are conventional or FHA loans. And while there are any number of factors determining the kind of mortgage you are eligible for, some basic requirements need to be met. Ideally, these types of mortgages require a 20% down payment. If you cannot meet that requirement, depending on the type of loan you qualify for, you could pay PMI (private mortgage insurance, used in conventional loans) or MIP (mortgage insurance premium, used in FHA and USDA loans).
VA loans require no down payment and no mortgage insurance. This means a veteran can purchase a home with no money down. Both PMI and MIP come with a cost and as we’ve discussed in other posts, can be difficult to eliminate once it is added to the loan.
Veterans can do a great deal of comparison shopping for the exact mortgage that meets their needs, tapping a wide variety of institutions for the right loan. This includes loans that have fixed rates or adjustable on a wide variety of property types. Qualifying is also more relaxed for veterans as well.
One of the reasons lenders will make these types of concessions is because the federal government is standing behind those loans. That guarantee for a portion of the loan gives the lender some peace of mind that, even if several monthly payments are missed, for whatever reason, the government will be there to make it right.
Another interesting characteristic of these types of loans is assumability. This feature may seem a bit antiquated but with the increased possibility of rates heading higher from their already historic lows, this could prove a godsend for another VA-qualified home buyer allowing them to “assume” the current low interest rate.
One additional thing to note: closing costs are often lower for VA qualified borrowers.
A Small Downside
VA loans often come with a funding fee. The actual fee varies due to the size of the loan and does not need to be paid in upfront cash. Instead, the fee can be “rolled” into the loan. My financial friends tell me that this is not the best financial move. They explain that spreading this cost over thirty years may seem like a good option at the time but even at the low interest rates charged, this could end up being a very costly decision. But, on the upside, the fee can be waived for veterans who are disabled or for surviving spouses. It is important to note VA loans are intended for primary residences only and may have some restrictions on condominiums or townhomes.
How can we assist you today?
On behalf of The Jones Group @ Sunriver Realty
Nola Horton-Jones, Principal Broker/Realtor | ABR, C-RIS, e-PRO, GREEN, RSPS, CCIM Candidate
Bryce Jones, Broker/Realtor | ABR, CRS, e-PRO, GREEN, GRI, RSPS, SFR
Karen Marcy, Broker/Realtor
The Jones Group @ Sunriver Realty | 57057 Beaver Drive | Sunriver, OR 97707
Mobile: 541-420- 3725 | Mobile: 541-420- 4018 | Mobile: 503-327- 9611 | Fax: 541-593- 5123
Licensed in Oregon